Forrester: Customer Experience Counts

Customer satisfaction should be the number one priority in any business. Customer experience is usually measured by whether the company meets a customer's needs, whether the company is easy to work with, and the satisfaction of a consumer's interactions with the company.

Companies especially call or contact centers need to deal with customers on a daily basis, making sure each one hangs up the phone satisfied or at lest close to it. A new report from Forrester Research shows that customer experience is closely tied to customer loyalty, and that the relationship between the two has increased since last year.

The report measures loyalty by a customer's willingness to repurchase from a company, reluctance to switch and likelihood to recommend.

"It's a no-brainer," said Bruce Temkin, VP and principal analyst, customer experience at Forrester, author of the report. "Customers will do more business with companies that serve them best, and a good portion of what they evaluate is the experience."

He added, "The big takeaway is that customer experience is the loyalty magic bullet if there is one. Marketers need to make sure they are building loyalty the old-fashioned way, one interaction at a time. If you aren't delivering good interaction and meeting needs and being easy to work with, then customers will leave you."

The report includes data between September 2007 and October 2008 explaining the link between customer experience and loyalty has gotten even stronger across all industries. The correlation between experience and repurchasing grew the most for TV service providers and investment firms, while the relationship between reluctance to switch and experience grew the most for investment firms and medical insurers.

Temkin said he was surprised to see the link between experience and loyalty increase across the board, but he takes it as a sign that customer experience has only become more important in this economy.

"The fact that it went up in all industries was a sign that in down times, customers become even more alert to the way they're being treated and get even more sensitive to the experiences they have, so that was the big 'A-ha!' from the research this year," Temkin said.

"When times are good, consumers just continue on their merry way, but in this economic environment, every purchase they make, every service interaction they have is a large portion of what they care about," he continued. "They're more emotional about everything and, therefore, a bad experience resonates even more negatively."

In the long run, especially during this economic environment as Temkin puts it, many are running on thin ice and this might only be the beginning. These findings go to show that service with a smile can go a long way.